BP, Russia reach agreement on Arctic drilling

No sooner had a presidential commission issued its report on last year’s Gulf of Mexico oil spill slamming the oil industry for careless practices, when BP closed a deal with the Russian state-run oil firm Rosneft for drilling in the Russian Arctic.

The deal, announced jointly Friday night by BP CEO Bob Dudley and Rosneft’s Eduard Khudainatov, opens up 125,000 square kilometers of the South Kara Sea which could yield 35 billion barrels of oil and 10 trillion cubic meters of natural gas, according an article in the Wall Street Journal.

Environmentalists who have long been trying to protect the fragile Arctic regions are already raising their voices in protest.

“BP once stood for British Petroleum. With this deal it now stands for Bolshoi Petroleum,” said U.S. Rep. Edward Markey, D-Mass., in a statement on his website. He called for a close examination of the agreement, and its effect on the U.S. economy.

Under the terms of the agreement, Rosneft will get a 5% share in the ownership of BP, with BP getting a 9% stake in Rosneft. The financial community, for its part, appears to support the move, with BP shares reported higher today.

The environmental organization Greenpeace issued a statement criticizing the deal.

“BP has done little to address the issues raised by the Deepwater Horizon Disaster,” as reported in The Guardian.Last summer, BP withdrew from trying to gain a license for off-shore drilling from Greenland, following protests and concerns about their safety record. These same issues haven’t been raised by their new Russian government partners, who have a shoddy environmental record of their own. Australia, however, has given BP the go-ahead to begin developing offshore oil drilling, provided they show improvements in their operations.